Clause-wise Analysis of Part A of GSTR 9C

In GST audit u/s 35(5), there is no specific report have to be given by the GST auditor. GST auditor has to certify the prescribed Reconciliation Statement from GSTR 9C. Auditor have to fill Part B portion (as per requirement) of GSTR 9C with proper observations/ comments / discrepancies /disclosures and certify true and correctness of GSTR 9C’s reconciliation after giving proper recommendation in part A. Then the auditor signs the form by using his DSC and creates the JESON file and sends the file to auditee for upload in GST portal. According to Section 42(2), Registered person (auditee) have to file the digitally signed (signed by the auditor) GSTR 9C and scan copy of audited financial statements in GST portal by using EVC or own DSC (DS mandatorily needed in applicable cases). When GST books, records, data audit is conducted by the auditor who already conducted the audit of books of accounts under any law (same auditor for audit GAAP books of accounts and GST data with GSTR 9C certification), has to certify GSTR 9C by using first option of Part B of the certification section and when the GST books and record’s auditor did not conduct the audit of GAAP books and accounts (audit of books and accounts of GAAP purpose was done by another auditor) has to certify GSTR 9C by using the second option of Part B of the certification section.

In that write-up, I am trying to make lawful discussion about every clauses of GSTR 9C with clarification from my personal point of view. We know that filing of annual return in the form of GSTR 9 by the registered person (for composite scheme holder, GSTR 9A) other than TDS detector, TCS collector, casual taxable person and non-resident taxable person is mandatory according to section 44(1) of CGST act but when the “aggregate turnover” according to section 2(6) of that registered person (PAN basis) exceeds Rs.2 crore in a financial year, he has to get his accounts audited by a C.A. or C.M.A according to section 35(5) read with rule 80(3) and also have to submit a copy of the audited annual accounts along with certified (certified by C.A. or C.M.A.) reconciliation statement in the form of GSTR 9C according to section 44(2).

Now we have to know that audit applicability depends on limit (touching Rs. 2 Crore) of “Aggregate Turnover” according to Rule 80(3) and “Aggregate Turnover” is aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess. So audit liability goes to entity level (PAN). We can clearly say when any entity (PAN) has more than one GSTIN (distinct person), for compliance, has to file GSTR 9C for every GSTIN irrespective of individual turnover of GSTIN level. (Example: “A”, the Company have two GSTIN and one GSTIN has turnover of Rs. 1 Crore and 80 lac when another GSTIN has turnover of Rs. 30 lac. Now audit is applicable for A, the company (I mean both GSTIN are liable for audit) and every GSTIN have to file GSTR 9C separately. It is not mandatory to certify both GSTIN’s GSTR 9C by same auditor.

The Form, GSTR 9C has two parts. Part A and Part B. Part A is for calculation and reconciliation and recommendation (Recommendation of auditor) and part B is for certification of GST auditor. Now Part A is divided by five points (pt) and every point have some tables where tables are divided into some sub tables.

Point I (Pt. I): That point is basically for the basic information. Table 1 to 4 are given in that point.

Table 1: Financial Year: You have to put the FY for which that GSTR 9C is filing (I am discussing about financial year 2017-18 in the write-up)

Table 2: GSTIN: You have to put the GSTIN for which that GSTR 9C is prepared.

Table 3A: Legal Name: You have to put the name of the person (entity) as per PAN data.

Table 3B: Trade Name (if any): You have to put the trade name in that table as per GST Registration Certificate.

Table 4: Are you liable to audit under any Act?: If the entity is liable for audit under any act like Income Tax Act, Cooperative Society Act, Companies Act, you have to put those name of acts on which the entity is liable for audit.

Data requirement: The main factor of GSTR 9C is GSTIN wise data (when any entity have more than one GSTIN) of financials audited accounts. As per section 35(1), read with rule 56, GSTIN wise (if any GSTIN have more than one declared business place then GST records should maintain separately for each business place) GST books and records have to be maintained but books of accounts as per accounting process may be maintained for entity level in place of GSTIN level. Maintenance of accounting entries also in accounting books in GSTIN wise separately is alleyways helpful but generally audited financial records (Final Accounts) are prepared for entity level so the management of the entity have to prepare some sheets by which the financial audited data is divided into data of GSTIN wise as per requirement and certify from the auditor who conducted the audit of financial books (when GST auditor and Financial Books Auditor are different) and provide the sheet to GST auditor. Here detailed Trial Balances may be used. Detail processes are described in my previous write-up on GST audit u/s 35(5). Not only F.Y.-17-18, you have to watch (management certified) Trial balances or financial statements for 18-19 also for some adjustment for GST matters.

Point II (Pt. II): Reconciliation of turnover declared in audited Annual Financial Statement with turnover declared in Annual Return (GSTR9)

You have to reconcile the turnover declared in audited financial records for the GSTIN for which that GSTR 9C is prepared, to reach the gross turnover declared in annual return, I mean GSTR 9 of the GSTIN. And if any un-reconciled amount is found, have to put the reason. After reconciling the gross turnover, you have to reconcile the taxable turnover and again compare the reconcile data of financial records of taxable turnover with taxable turnover declared in GSTR 9 and have to give reasons, if any un-reconciled amount was found. Main table No. 5, 6, 7 and 8 are given in that point. Completeness of gross turnover and taxable turnover is the main aim for that part. From my point of view, 5P is the table where the exact gross turnover of that GSTIN as per GST law should be reflected (including of revenue generated from Schedule III of CGST act) and 7E is the table where the exact taxable turnover of that GSTIN should be reflected as per GST law. When you compare table 5P with respective data of GSTR 9 and table 7E with respective data of GSTR 9, we can find whether any under declare or over declare turnovers were done up to the filing of GSTR 9 or not (though its depends on GSTR 9 in some cases as we have to compare with GSTR 9 in place of every comply for the FY).

Table No. 5A: Turnover (including exports) as per audited financial statements for the State / UT (For multi-GSTIN units under same PAN the turnover shall be derived from the audited Annual Financial Statement):

You have to put the turnover of audited financial statement in that table. I mean turnover for that GSTIN including export turnover for applicable cases (watch the above discussed point, “Data Requirement” for those cases where the entity has more than one GSTIN). You may take the trial balance of that GSTIN and consider those ledgers, which are taken for formation of turnover in audited financials. Please watch my previous write up regarding GST audit u/s 35(5) for details procedure of making various segregated data sheet for malty GSTIN cases. We know some ledgers’ balances are reflected in credit side of Trading and Profit and Loss account but all ledger’s balances in credit side of Trading and Profit and Loss account are not treated as Financial Turnover. From my point of view, you can take the ledgers’ balances which are considered as financial turnover of financial final accounts, in table 5A and you have to keep in mind that other ledgers’ balances which are reflected in credit side of Trading and Profit and Loss account should considered in required tables if those ledgers balances are subject to GST supply and auditor should give the discloser regarding that point of GSTR 9C.

Some of my very close view: GSTR 9C is a reconciliation statement which will be certified by the auditor. Finding out the proper aggregate turnover as per GST law by using the financial audited statements and compare with annual return is the first work of GSTR 9C. If the entity have more than one GSTIN, then the portion of aggregate turnover which is generated from that GSTIN, is the turnover which has to be disclosed properly in GSTR 9C for that GSTIN as per GST law. Mainly all outward Supply (including export cases) and Deemed supply of that GSTIN have to consider as GST turnover of that GSTIN. As applicable schedule III items have were disclosed as “No supply” in GSTIN 9 so that parts are also automatically included in table 5P of GSTR 9C. You start from table 5A by putting up turnover of financial statements. Now you have to find the places from where GST supply (Outward, Deemed) may triggered to GST. Generally you can make four parts of final accounts i.e. Income/Profit side, Expenses/Loss side, Assets Side and Liability Side. Outward supply/deemed supply can make its effect from any place of those four sides. Outward Supply/Deemed Supply may be established without touching the net financials. Sometime sale/service rendered value as per financial records are not the same value as declared in GST supply matters. So you have many points to watch and reconcile the accounting data with GST data in GSTR 9C. I think auditors should disclose the policies (for every table/sub table) which he/she is taking for filling GSTR 9C.

To reach GST turnover from accounting turnover, we have to add some amount with accounting turnover (table 5A) through applicable sub tables and also have to deduct some amount from accounting turnover (Table 5A) through applicable tables.

Table 5B: (Add) Unbilled revenue at the beginning of Financial Year:

Firstly we have to know the concept of “unbilled revenue”. When accrual basis of accounting is going on, sometime some revenue was recognized as per implemented accounting slandered (like AS 9) but invoice for the same was not issued at that time of revenue recognition, that revenue is called as unbilled revenue on that date. In GST, supply is established when the clauses of section 12, 13, 14 (as per requirement) of CGST act are fluffed and invoice have to be raised according to section 31 of CGST act. You have to add the figure of unbilled revenue as on 31.03.2017 through table 5B.

My close view regarding Table 5B, 5H and 5G

By GSTR 9C you have to calculate that type of GST supply matter after adjusting opening and closing figure from accounting figure. Suppose unbilled revenue as on 31.03.2017 was Rs. 2000/- and unbilled revenue as on 31.03.2018 was Rs. 1500/- and Financial Turnover was Rs. 4000/- for FY 17-18. So the understanding is Rs. 2000/- have to add with Rs.4000/- (Rs. 2000/- not included in Rs.4000 as Rs. 2000/- was a part of turnover for the FY 16-17) through table 5B as there is a chance of attracting GST supply for Rs. 2000/- within FY 17-18. Now if Rs. 1500/- still unaffected by section 12 and 13 and unbilled as on 31.03.2018 after considering revenue of Rs. 1500/- in financials within FY 17-18, we have to deduct Rs. 1500/- from Rs.4000/- by using table 5H for reaching GST turnover of FY 17-18 as Rs. 4000/- is already included with Rs. 1500/- in financials. Now when the unbilled revenue of Rs. 2000/- as on 31.03.2017 was billed within 01.04.2017 to 30.06.2017 and already added in table 5B, you have to deduct the amount again (as the billing of unbilled revenue is not considered in GST period) by table 5G. Auditors shall disclose the policies of reconciliation for those tables and also disclose the name of ledgers for revenue for which those provisions are applied. These disclosers will also help in next year’s GSTR 9C reconciliation.

Table 5C: (Add) Unadjusted advances at the end of the Financial Year:

The provision of time of supply of goods at the advance consideration point was withdrawn by government for the regd. persons having turnover less than 1.5 crore during last financial year from 13.10.17. Again time of supply of goods at advance consideration point was withdrawn by government from 15.11.17 for those registered persons whose turnover during last financial year crosses 1.5 crore. But no relaxation was given for time of supply at advance receipt point for services. So advance received for supply of services in any time is considered as time of supply. As per financial records, advances are not considered as turnover. Advances are situated in the liability side of Balance Sheet but in GST law, (as per applicable cases, after considering the above relaxation) advances received established time of supply. So (applicable cases according to above discussion) advances are considered as GST turnover. As we start from Accounting Turnover in table 5A, we have to add those advances as on 31.3.2018 which are considerable as turnover in GST. So You have to watch the balance of advances as on 31.3.2018 very closely and within that amount, if any part is considered as time of supply attract on advance received time within FY 17-18 (as per applicable cases of the above discussion), you have to add those part only in table 5C. For supply of services, no calculation needed, straight way it should attract GST supply.

Table 5D: (Add) Deemed Supply under Schedule I:

I think Schedule I of CGST act’s transactions/activities are not unknown to anybody. It talks about some kind of activities to be treated as supply even there is no considerations. Supply made to related persons and distinct persons are not depending on consideration.

You have to know that if the schedule I supplies are already considered with Table 5A, then no need to declare those transactions in table 5D, only the difference amount for valuation of GST supply (difference between accounting Sale/Services leger’s amount and value of supply as per valuation on which tax is chargeable) have to add or less in table 5M.

i) Supply made to distinct person: If any entity have more than one GSTIN and you are filling up the GSTR 9C for a GSTIN who supplied goods or services to another GSTIN of that entity then firstly you have to watch whether that GSTIN’s financial turnover is included that sale/service rendered or not. If not included (not included in table 5A also), then you have to add those amount to reach the GST turnover. Now the question is what value you have to add. As the supply transacted between two distinct person then those kinds of GST turnover depends on Valuation Rule, (Rule 28 may attract) so you have to put the value according to valuation in that table [if the turnover of GST also covered in financial turnover of that GSTIN then you have to watch the Sale/Service rendered ledger’s accounting amount and value of supply (for chargeability of GST). If both the amount are not same then you have to declare the balance (when 5A included that kind of sale/service rendered ledger’s figure) amount in Table 5M (as per requirement, have to add or subtract)]

ii) Supply made to related person without consideration: When any goods or services or both supplied to any related person (related persons are described in section 15 of CGST act) without any consideration, then it may treated as business gift in books so it may reflect its effect in debit side of P/L account so it is not included in Financial Turnover (table 5A) so you have to add the amount (as it is related party supply so valuation rule applicable) through that Table according to value of supply (For gift to employee, have relaxation from that provision for per employee per year upto Rs. 50, 000/-).

iii) Permanent Transfer or disposal of Business Assets (for which ITC was taken) without any consideration: When any goods (being business assets) for which ITC was taken earlier, is given permanently without any consideration then deemed supply is attracted. Some time we may pass those accounting book entries as business promotional expenses. Then that matter is not attracting as turnover in financials so not included in table 5A so you have to add according to the value determined as per GST law through table 5D but Some time some goods are given with another goods for promote sale then it may attract mixed sales in GST for combo pack system according to situations (if all conditions are fulfilled) and in Financial books it is also appeared as sale for a consulted consideration so no need to declare those amounts in table 5D as table 5A already includes those sale.

iv) Transactions with agents: In applicable cases, if the applicable for re conciliation, you have to declare those transactions here and obviously value shall declare as per valuation Rule 29.

Table 5E: (Less) Credit Notes issued after the end of the financial year but reflected in the annual return:

From my point of view, the heading should treated as “GST CREDIT NOTES ISSUED AFTER THE END OF THE FINANCIAL YEAR BUT REFLECTED IN THE ANNUAL RETURN” if the Credit Note is issued after the time prescribed u/s 34(2) then it is not considered as GST purpose credit note. Here in that table “Credit Note” means GST purpose credit note. We know, according to section 34(1), Credit notes for GST purpose can be issued by the supplier for three situations within time limit prescribed u/s 34(2). The situations are i) when tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply (Allowable cases for reduction of value of supply as per section 16(3) also subject to credit note according to that point), ii) where the goods supplied are returned by the recipient and iii) where goods or services or both supplied are found to be deficient. Now the basic understanding is that GST credit note reduces the actual value of supply and output tax of that said supply. Now according to section 34(2), last date of issuing of GST credit note (also have to declare in return within those month’s data submission period) for any supply for a year is last date of September of lowing financial year or the date of furnishing of the relevant annual return, whichever is earlier. So if FY 17-18’s GST credit note is issued and accounted in FY 18-19 within allowable time (notifications also important for allowable time) and the credit note’s effect was shown in GSTR 9 (It means, the value of supply was reduced already in annual return), you have to subtract that value (Value of supply in credit note) by using that table because the accounting entry in GAAP books of that GST credit not is passed in FY 18-19 so the figure of Accounting Turnover of FY 17-18 is not reduced by that amount within FY 17-18 so the amount of table 5A is not consider the GST credit note’s value. So you have to reduce the amount to reach the GST turnover for FY 17-18.. You also have to remember that if the GST credit note is issued in FY 18-19 within the time limit u/s 34(2) the effect has to be given here.

Table 5F: (Add) Trade Discounts accounted for in the audited Annual Financial Statement but are not permissible under GST:

Reduction from value of supply in cases of discount are governed by section 15(3), there are two types of allowable discounts. First one is Pre-Supply or in time of supply discount and second one is post supply discount. In section 15(3), some criteria’s are given for allow ability of reduction from value of supply in discount matters. Also for applicable discount matter, supplier has to issue credit note according to section 34. The table is asking for reconciliation for Trade Discounts based on some criteria. So at first we have to know about the trade discount. The term “trade discount” is not defined in GST law. So in general cases trade discounts are not separately accounted in financials. Directly the discount reduces the sale figure in financials and also that discount cannot hit the value of supply. So that kind of cases no difference occurs between accounting turnover and GST value of supply so no adjustment required. When discounts of FY 17-18 are not allowed as deduction from value of supply according to section 15(3), financial credit note may issue by the supplier. When that matter was taken place within FY 17-18 and supplier reduced his financial turnover of FY 17-18, you have to add the amount by using that table. Financial turnover was reduced but GST cannot consider that matter as reduction of value of supply so you have to add the amount. Definitely you have to remember if those not permutable (not allowable in GST) discounts are shown in Debit side of Profit and Loss Account (generally cash discount process) or not deducting from accounting turnover of FY 17-18 in financial statements then no further addition is needed in GSTR 9C.

Table 5G: (Less)Turnover from April 2017 to June 2017:

You have to deduct financial turnover from 01.04.2017 to 30.06.2017 (for which GST was not levy able) from the audited financial turnover for the entire Financial Year 2017-18. As GST was getting in force from 01.07.2017 so we have to subtract the turnover from 01.04.2017 to 30.06.2017 (consider the portion of turnover between 01.04.2017 to 30.06.2017 for which GST was not leviable) through this table.

Table 5H: (Less) Unbilled revenue at the end of Financial Year:

In table 5B, we added the unbilled revenue at the beginning of the Financial Year for which GSTR 9C is prepared now you have to think regarding the unbilled revenue at the end of the Financial Year for which GSTR 9C is prepared. When revenue was recognized within FY 17-18 means the revenue is included in FY 17-18’s financial turnover but invoice was not made within FY 17-18 and also time of supply not attract within FY 17-18 you have to reduce the value from financial turnover in table 5H to reach the GST turnover.

Table 5I: (Less) Unadjusted advances at the beginning of the Financial Year:

In table 5C, we watch the unadjusted advances as at 31.03.2018 (for the applicable future supplies for which time of supply attract in advance consideration received) are added with financial turnover to reach the GST turnover. Now when advances were given in previous financial year (advance stand in starting day of the financial year for which GSTR 9C is prepared) and for those advances, GST time of supply was attracted and declared in previous financial year (but that advances are converted in financial turnover within that financial year for which GSTR 9C is prepared), we have to reduce the value from that year’s (for which GSTR 9C is prepared) financial turnover. We have to remember GST was introduced on 01.07.2017 so there is no chance for that kind of adjustments (reconciliation for unadjusted advances at the beginning of the financial year) for the reconciliation purpose for FY 17-18.

Table 5J: (Add) Credit notes accounted for in the audited Annual Financial Statement but are not permissible under GST:

Already I discussed regarding credit note in description of table 5E. when credit notes for financial purpose was accounted within the financial year (2017-18) and in financial records it reduced that year’s financial turnover but for any reason if the credit notes are not per-mutable in GST for reduce the GST purpose turnover (value of supply), you have to add the value with financial turnover through the table 5J. You have to do it for tallied up financial turnover with GST turnover (You have to disclose all non GST financial credit notes accounted within FY 17-18, excluding already declared non GST credit notes in table 5F). You have to remember, when the financial credit note’s effect reduce the financial turnover of FY 17-18 then you have to add again to reach GST turnover but if the financial effect of that credit note of FY-17-18 not reduce the financial turnover of 17-18, no further addition needed.

Table 5K: (Less) Adjustments on account of supply of goods by SEZ units to DTA Units:

When the SEZ unit supplied goods to DTA unit, financial turnover is established in the hand of SEZ unit but for the same transaction, it is not covered under GST supply for return purpose for SEZ unit. So you have to deduct the value when you are preparing the GSTR 9C of SEZ unit.

Table 5L: (Less) Turnover for the period under composition scheme:

If the GSTIN avail composition levy of GST for any period of FY 17-18, he has to deduct the turnover for composition period from financial turnover. So you shall declare the turnover for composition period (within FY 17-18) in table 5L.

Table 5M: (Add/Less as per requirement) Adjustments in turnover under section 15 and rules there under:

This is the table where you have to reconcile the deference of turnover (between financials and GST books) appearing for valuation rule’s effect (for applicable transactions) and the concept of value of supply according to section 15.

Example 1 Suppose a PAN have 2 GSTINs and the GSTIN for which the 9C is prepared, have a sale (Stock transfer) or rendering of services to another GSTIN, and in the hands of that GSTIN it is covered as sales and in another GSTIN it is covered as purchase in separation sheet (sheet should be audited or certified by management and the ultimate result should tallied with audited financials of the entity, I mean audited final accounts of the PAN) and for example the sale value (without Tax figure) is considered as Rs. 100/- and Tax is Rs. 7.5/- (though rate is 5%). As GST purpose value of supply is considered as per valuation rule 28, and valuation stands at Rs 150/- (Assuming the value of supply calculated as Rs 150/- after considering the valuation rule) and the total invoice amount is Rs. 100+7.5=107.5/- Now in financial statements for that GSTIN (supplier), sale for financial purpose of that GSTIN (Turnover for financial purpose for that GSTIN) is established as Rs.100/- and it is reflected in table 5A. So you have to add the balance of Rs. 50/- in table 5M to reach the GST turnover of Rs. 150/- for that transaction.

Example 2: We know, according to section 15, value of taxable supply is considered after adding of incidental expenses charged by the supplier so if any kind of expenses which was also chargeable and charged to recipient with Sale/Service (supply), but in financials it considered as non-turnover revenue /liability (It depends on accounting disclosure policies) then it did not included with table 5A so you have to add the amount to reach the GST turnover. (If already included in financial turnover, I mean included with table 5A, then no reconciliation needed for non-valuation rule applicable cases and valuation effected cases the different value shall added or subtract as per the case study)

Example 3: If any interest or penalty received for delayed payment of any supply by supplier from recipient, the value of that supply is increased for GST purpose according to section 15(2)(d) on the time of supply date for that supply and by issuing GST debit note on that penalty received time, the adjustment have to be done in financials accounts. So if the value is not included with table 5A (when the interest or penalty of delayed payment was not transacted within the financial year or when that kind of penalty or interest received show in non-turnover head of credit side of P/L account then the amount is not considered with the amount of 5A), you have to add those amounts to reach the GST turnover for that year for which the GSTR 9C is prepared.

Some expert may say the transitions have to reconcile through that table (table 5M) where invoice value and taxable values are not same according to instructions of table 5M of notice no. 74/2018-Central Tax. So by using that particular table you cannot reconcile the transactions described above in example no. 3 but from my view point, transactions falling in example 3 should cover under that table because the instruction of notice no. 74/2018-Central Tax says, you can reconcile those cases where the taxable value and the invoice value differ due to valuation principles under section 15 of the CGST Act, 2017 and rules there under. So they did not say for reconciliation by using that table where the taxable value declared in invoice and invoice values are not same. So when debit note needed for establishing the value of supply principal according to section 15, then you can use that table. Now that instruction say again that “any difference between the turnover reported in the Annual Return (GSTR 9) and turnover reported in the audited Annual Financial Statement due to difference in valuation of supplies shall be declared here” I have a strong objection on that point from my personal point of view because you have to reach the GST turnover according to GST law from accounting turnover then we have to compare the GST turnover according to GST law with declared GST turnover in GSTR 9. GSTR 9 was prepared by auditee so he may under declare or over declare the GST turnover (for any reason, like non understanding the GST turnover properly) but GSTR 9C has to be certified by auditor, so when he certify the GST turnover in table no. 5P, it is expected that there is total lawful GST purpose turnover reflected in table 5P. Table 5R is effected by some amount when turnover as per GSTR 9 (Table 5Q of GSTR 9C) is not same with table 5P. So from my point of view for establishing the GST turnover according to GST law, you should not consider the matter of GSTR 9. You should consider the GST law to reach GST turnover in table 5P, reconciling from financial turnover in table 5A. If GSTR 9 was filling up as per proper way then no difference will appear in table 5R.

Example 4: Some time value of supply have to be calculated for GST purpose according to section 15(2)(b) but financial turnover transacted as per net basis. Suppose the person supplying work contract services to recipients and all goods involved for that supply have to be given by supplier according to contract agreement but for any reason, recipient provide some goods and the amount receivable from recipient for that supply is calculated as per net basis for accounting purpose (value of the goods provided by recipient is not considered in financials for calculating revenue). Then according to value of supply for GST purpose, you have to add the value of those materials to calculate the value of supply. So when the value of those goods are not included in table 5A, you have to add the amount in that table to reach GST purpose turnover.

Example 5: when value of supply is calculated on margin figure as per Rule 32(5), you have to reconcile the difference figure between sale value of Financial turnover (included in table 5A) and GST purpose value of supply (marginal price, on which GST is charged) through that table.

Others: Any cases of valuation rule (rule 27 to rule 35) for which the financial turnover value is not matched with GST value of supply, you have to reconcile the figure through table 5M. (If any reconciliation for valuation rule reconciled with full/different amount through other tables, no further reconciliation needed in that table)

Table 5N: (Add/Less as per requirement) Adjustments in turnover due to foreign exchange fluctuations:

When the registered person transacts a transaction by using foreign currency (Mainly in time of import and export), foreign exchange gain or loss may arise in his hand or his Accounting turnover and Value of supply may getting difference. When GST supply value is getting difference from Accounting Turnover (As per Financials which was taken in table 5A), have to make the adjustment for reconciliation through that table. In financial accounting some cases other than borrowings, effect of changes in froing exchange rate is governed by AS 11 and foreign exchange rate of determine the value of supply depends on Rule 34 of CGST rule. Suppose goods are exported to another country so forex transaction is accounted in the GAAP books based on Reserve Bank’s declared exchange rate but as per GST law, for value determination, exchange rate for required day is taken as per rate notified by CBEC. So if the amount included in table 5A is higher than the calculating value according to rule 34, you have to subtract the balance figure in that table and if the matter is vice a versa of the above example, then you have to add the balance figure in that table.
We have to remember if the difference gain or loss in accounting for the difference between sale and actual received is not adjusted in Table 5A’s amount then no adjustment needed but if the gain or loss adjusted with table 5A, then you have to add or subtract the amount(as per requirement).

Table 5O: (Add/Less as per requirement) Adjustments in turnover due to reasons not listed above:

If the above tables are not fulfilled your all required additions and deductions, you have to use table 5O.

Example 1: Sale of Capital Goods (sale after capitalized any goods in books) is a transaction for which financial turnover is not affected. The accounting profit on sale is going to profit and loss account but it is not included with accounting turnover also. The profit is established as other income. But in GST records, entire sale amount is consider as supply [where credit is taken in time of purchase, credit matter and tax amount calculated according to section 18(6), read with Rule 44(6) so value of supply sometime depends on that calculation]. According to GST law, the considerable value of supply is added to reach the GST turnover. If the profit on sale of capital goods treated as financial turnover, you have to reduce that profit amount to reach GST turnover amount.

Example 2: Cases where Debit Note is issued and accounted in next financial year (2018-19) but related to the financial year 2017-18 for which the GSTR 9C is prepared, you can add those values in that table to reach the GST turnover. (If already declared in table 5M according to example 3 for explanation of table 5M in that write-up, no need to declare those values in that table again)

Example 3: When GST credit note (allowable for GST credit note as per section 34) is issued and accounted within FY 17-18 but in financial accounts, it is treated as expenses in P/L account, you have to reduce the value from financial turnover to reach the GST turnover through that table.

Example 4: If any supply was neither shown in financial accounts nor shown in GST returns, you may declare in that table because from auditor’s prospective the completeness of turnover is very vital.

Example 5: Deemed supply for job work u/s 143, you may declare here though for capital goods, deemed supply in hand of principal is not subject matter for FY 17-18 as three years are not covered so far.

Example 6: When any purchase return in financial accounts adjusted with purchase (that is the accounting process to show purchase return) but in GST records it shows as supply, you have to declare the value of those supply here as addition.

Table 5P: (Auto calculated) Annual turnover after adjustments as above: That table reflect the value of FY 17-18’s GST purpose Gross turnover. It is auto calculated table. We start from accounting turnover in table 5A and then doing various additions and deductions through table 5B to table 5O and reach the GST purpose gross annual turnover for the FY 17-18 in table 5P. The table’s value is very important from the point of view of completeness of gross turnover as per GST law (Schedule III revenue items are also auto included in that table but as per GST aggregate turnover u/s 2(6) cannot support that but from my point of view of matching the financials with GST records is very good for reporting purpose)

Table 5Q: Turnover as declared in Annual Return (GSTR9): That is the table where you have to put the turnover declared in GSTR 9. Now the question is from which tables of GSTR 9, you have to take. We know in GSTR 9, turnover section is divided into overall two types one is turnover of FY -17-18, declared in returns and statements filed for the FY 17-18 and another one is turnover of FY 17-18, declared in returns and statements filed for the FY 18-19. So you have to take data from table. No. 5N, 10 and 11 of Annual Return (GSTR 9).

Table 5R: Un-Reconciled turnover (Q – P): When table 5P is not same with table 5Q, the un-reconciled amount is appeared in table 5R. if the amount of table 5P is higher than amount of table 5Q and appeared for taxable supply (tax applicable) then in some cases have a chance of attraction of additional liability for GSTR 9C reconciliation but if before GSTR 9C filing the tax was paid by DRC 03 according to law, there is no extra tax liability is subject matter.

Table 6: Reasons for Un – Reconciled difference in Annual Gross Turnover: You have to put the reasons for those amount which is appeared in table 5R.

Reconciliation of Taxable Turnover:

Through tables 5A to table 5G you have to find out the taxable turnover by taking table 5P’s amount as starting point in table 7A. We can say, from GST purpose gross turnover, you have to deduct that turnover for which GST is not chargeable to reach the GST purpose taxable turnover and compare that figure with GSTR 9’s taxable turnover.

Table 7A: (Auto calculated) Annual turnover after adjustments (from 5P above)

As table 5P’s figure is the actual GST purpose gross turnover for FY 17-18, you shall start from that value to reach the taxable turnover for FY 17-18. It is auto calculated table. Table 5P’s figure automatically come in the table 7A.

Table 7B: Value of Exempted, Nil Rated, Non-GST supplies, No-Supply turnover: vale of exempted, nil rated, non GST supplies and No supply (No supply turnover means revenue items of Schedule III of CGST act) shall be declared in that table. This shall be reported net of credit notes, debit notes and amendments if any. Now if any exempted, nil rated, non GST supplies and No supply was not declared in financials turnover and GSTR 9 but declare in table 5O of that GSTR 9C, you have to declare that supply in that table.

Table 7C: Zero rated supply without payment of Tax:

Value of Zero rated supplies including supplies to SEZ (Most of the cases the exports without payment of IGST are subject matter of that table). This shall be reported net of credit notes, debit notes and amendments if any.

Table 7D: Supplies on which tax is to be paid by the recipient on reverse charge basis:

This is the table for those supplies which were supplied by the GSTIN for which that GSTR 9C is prepared but tax has to pay by the recipient of the GSTIN on reverse charge basis. As an example, you are filling a GSTR 9C of a GSTIN (for which the GSTR 9C is prepared), engaged in providing GTA service and he applies the process where he is giving the tax liability to recipient @ 5% and no input credit was taken by him for his various inward taxable supplies which were used for providing that outward supply by the supplier (GTA). So in the hands of that GSTIN (GTA), turnover is not subject matter of tax. So you have to put that kind of supplies in this table.

Table 7E: Taxable turnover as per adjustments above (A-B-C-D)

This is auto calculated table. The amount is calculated according to the formula, 7A-(7B+7C+7D). It means Table 7E is established as turnover on which tax (including Interest and others) has to be paid on forward charge as per GST law by the GSTIN for which that GSTR 9C is prepared. That table is the very vital table. Tax payable for forward charges as per GST law is calculated mainly on the value of that table according to various applicable rates in table 9.

Table 7F: Taxable turnover as per liability declared in Annual Return (GSTR9)

Table 7E is there for displaying the value of supplier on which that GSTIN have to pay tax on forward charges as per GST law. Now for compare that value with GSTR 9’s figure, you have to put the taxable turnover declared in GSTR 9 for which tax (including Interest and others) is subject matter in forward charges. Taxable turnover as declared in Table (4N – 4G) + (10-11) of the Annual Return (GSTR9) shall be declared here.

Table 7G: Un-reconciled taxable turnover (F-E):

If any un-reconciled taxable turnover appears, then the balance shall stand in that table.

Table 8: Reasons for Un – Reconciled difference in Taxable Turnover:

You have to put the reasons in table 8 for the amount appear in Table 7G

Point III (Pt. III): This point is there in GSTR 9C for reconciliation of tax paid. Table 9, 10 and 11 are there for the reconciliation.

Table 9: Reconciliation of rate wise liability and amount payable thereon

Table 9A, 9C, 9E, 9G, 9I, 9J and 9K:Table 9A, 9C, 9E, 9G, 9I, 9J and 9K talks about the total outward and deemed taxable supply and its (for which tax is to be paid on forward charge) rate wise tax payable. Each table is divided into three main columns. The first column is for description, second column is for taxable value and third column is for tax payable so second column’s sum total for table 9A, 9C, 9E, 9G, 9I, 9J and 9K should equal to the vale declared in table 7E. The third column is divided into four sub columns (CGST, SGST/UTGST, IGST and CESS) so we have to segregate the value of table 7E according to rate % and put the taxable values rate wise in tables 9A, 9C, 9E, 9G, 9I, 9J and 9K. Further we should put the taxes in proper sub columns of column 3 as per rate after considering the nature of supply of the transactions (properly placed in CGST/SGST/IGST sector). We have to disclose inward supplies’ taxable value and tax payable (rate wise) also for RCM cases in table 5B, 5D, 5F and 5H.

Some special guidance for table RCM (RC) for table 5B, 5D, 5F and 5H: We can match the total taxable figure of table 9A, 9C, 9E, 9G, 9I, 9J and 9K with the figure of table 7E but for the RCM inward supply cases you have to watch the books of accounts and relevant documents. If any liability on RCM appears as per section 12 and 13 within FY 17-18, you have to declare here. From my point of view, you have to judge the time of supply for RCM cases according to section 13 and 14 by the applicable documents, and if time of supply triggered FY 17-18, then you have to declare here because GSTR 9C disclose all payables matters (others matters also) according to GST law and you have to declare the actual payable figure (Not paid figure) here. So value of inward supply and taxes payable have to be declared in proper tables.

Table 9L, 9M, 9N, 9O: These tables are applicable for interests, late fees, penalties and others respectively. The second column is inactive for these heads means taxable value for these items are not needed. For the cases of interest you have to declare interest after considering time of taxable supply and its proper dispose off. If any interest arias for any outward supply, deemed supply and RCM cases according to law u/s 50, you have to calculate the proper interest figure and put that figure in proper sub columns of table 9L. From my point of view, auditors should give the discloser regarding interest payable calculation (whether the interest calculate on gross liability or net liability) in part B of GSTR 9C. Now for the supplies for which tax is still due on the date of GSTR 9C certification, interest have to calculate up to the date of GSTR 9C certification. If any penalty is subject matter then you have to declare those penalties also according to law in proper sub columns in table 5N.

Table 9P: TOTAL AMOUNT TO BE PAID AS PER TABLES ABOVE: This is a auto calculated table. All taxes, interests, late fees, penalties and others (sum total of table 9A to table 9O) are reflected according to CGST, SGST/UTGST, IGST, and Cess in applicable sub columns. This table shows the actual tax, interest, late fees, penalties and others for outward supply, deemed supply and RCM effected inward supply as per GST law for the FY 17-18.

Table 9Q: TOTAL AMOUNT PAID AS DECLARED IN ANNUAL RETURN (GSTR 9): Now for compare the value of table 9P with annual return, you have to put the TAX PAID amount here which was declared in GSTR 9 [The amount paid as declared in Table 9 of the Annual Return (GSTR9) shall be declared here]. It should also contain any differential tax paid on Table 10 or 11 (That is table 14 of GSTR 9) of the GSTR 9. In GSTR 9, table 9 and table 14 have mainly two types of options. One is TAX PAYABLE and another one is TAX PAID. I think TAX PAID options are considered for filling up table 9Q of GSTR 9C. Tax paid means dispose of output liability by using of Cash ledger or Credit ledger according to paid portions of table 9 of GSTR 9 and table 14 of GSTR 9. Now you have to compare the TAX PAYABLE amount of GSTR 9C as per GST law (table 9P of GSTR 9C) with TAX PAID amount shown in GSTR 9. If the amount of table 5P of GSTR 9C is higher than table 9Q of GSTR 9C then un-reconciled amount appear in table 9R. If the case is vise a versa then also a un-reconciled amount appear in table 9R.

Table 9R: UN-RECONCILED PAYMENT OF AMOUNT: When there is difference between table 9P and table 9Q, the un-reconciled differences appear in table 9R.

Cases related to Table 9R, Table 10 and Table 11:

When payable amount as per table 9P is greater than paid amount as per table 9Q, un-reconciled deference will come in table 9R as short payment (Short payment means liability of tax, interest, penalties etc. not fully discharge). Now if short payment comes in table 9R for any sub column or every sub columns or any two sub columns or any three sub columns (CGST, SGST/UTGST, IGST, CESS), you have to prepare an extra working sheet for segregate that amount as Tax, Interest, Late fees, Penalties etc. and also you have to segregate the basic tax figures according to various tax rates. You have to calculate the taxable value also for those tax figures in your extra working sheet. After preparing your extra working sheet your duty is to watch whether any relevant payment for Tax, Interest, Penalties etc.(for outward supply, deemed supply and RCM tax for inward supply) was made by the GSTIN through DRC 03 or not. Now you have to compare the short payment of Tax, Interest, Late fees, Penalties etc. in table 9R with discloser of payment of Tax, Interest, Late fees, Penalties etc. in DRC 03 (separately for CGST, SGST/UTGST, IGST, Cess). If short payment of table 9R of any head (watch your working sheet for head wise segregation) is greater than payment made through DRC 03 (Head wise), you have to declare the additional payable amount (with taxable value) for CGST, SGST/UTGST, IGST and Cess (Tax, Interest, Late fees, Penalties etc. wise) rate wise in table 11 after putting the details reasons for un-reconciled amount in table 10. And the amounts in table 11 have to pay through cash ledger only by DRC 03.

When payable amount as per table 9P is less than paid amount as per table 9Q, un-reconciled amount will come in table 9R as excess payment made. Now excess payment means tax, interest, penalties etc. paid in excess than the actual liability. Now you have to watch whether the GSTIN received any refund for excess tax payment matters (Refunds for other than excess payment need not to consider here) before the certification of GSTR 9C or not. If the excess payment made (stands in table 9R) according to lawfully GST reconciliation, is lower than the refund received before GSTR 9C certifying date for excess payment made purpose (only refund for excess payment made have to be considered here), auditor’s recommendation for additional liability payment is needed for the balance portion of excess refund receive in “Erroneous refund to be paid back” table of Point V (Pt. V) of GSTR 9C. If that refund application still not received within the date of GSTR 9C certification, no recommendation should needed in “Erroneous refund to be paid back” table of Point V (Pt. V) of GSTR 9C. Only auditor has to disclose the proper fact.

In some cases additional Tax liability also may appear in table 11 when table 5R and 6G are not attracted with any amount. I discuss four situations where that matter can happen. First situation: Through table 5 and table 7 we reconcile the turnover. In table 5, we reconcile Gross turnover and compared with GSTR 9 and from there, we deduct exempted supply, Nil Rated, Non-GST supplies, No Supply, Zero rated supplies without payment of tax, outward supplies for which that GSTIN’s recipients have to pay tax, in table 7 and reach the value of taxable turnover in table 7E as per GST law and compared with GSTR 9’s taxable turnover. Table 9B, 9D, 9F and 9H needs tax liability for Inward supplies for which reverse charge is applicable. Inward supplies for RCM are not a part of turnover so if any short payment made for financial year 17-18 for reverse charge cases, it create additional tax and interest liability but it not depends on turnover for table 5 and table 7. So additional tax liability may happen when Table 5R and 6G reflect as NIL for RCM tax liability.

Second situation: As We know that there are many percentages of tax rates for furrowed charges and also for reverse charges. Not only the value of supply, tax liability amount depends on proper classification of goods and services. So when any higher rate effected goods or services or both are declared as lower rate effected goods or services or both by auditee for FY 17-18, then additional tax liability may appear in GSTR 9C when taxable figure of GSTR 9 or 9C still have no difference.

Third situation: When auditee suffers any short tax liability against his self-declared taxable turnover for FY 17-18 (not paying the short tax within FY 18-19 by GSTR 3B filing and also not paid with DRC 03 before or after filing of GSTR 9 for FY 17-18) and the tax is still payable on the date of certification of GSTR 9C of 17-18, additional tax liability may appear and taxable turnover in GSTR 9 and 9C may have no difference for that case.

Fifth situation: When nature of supply was wrongly declared but value of supply was correctly declared in monthly returns for wrong determination of place of supply and others, and that wrong matters were not rectified so far, Tax on one head (like IGST) may show as still payable and another two heads (like CGST, SGST) are reflected as excess payment. The case may appear as vice a versa of previous example. taxable turnover in GSTR 9 and 9C may have no difference for that case.

Point IV (Pt. IV):

Reconciliation of Input Tax Credit (ITC):

Reconciliation of Input Tax Credit is also an important matter in GSTR 9C. We have already reconciled gross turnover, taxable turnover, and tax payment step by step. Now we have to reconcile Input Tax Credit for FY 17-18. Already table 9Q, was certified. And table 9Q has full or partial effect of input tax credit. So it is also very important to reconcile the credit related matters. Table 12, 13, 14, 15 and 16 are given for Point IV (Pt. IV). In table 12, you have to start from Input Tax Credit for FY 17-18 reflects in financial accounts and have to reach the amount of ITC claimed in FY 17-18 as per legal angel. Again you have to compare that amount with ITC claimed in GSTR 9 and find whether any un-reconciled credit comes or not. After that, again you have to segregate credit for FY 17-18 according to various expenses and expenses of capital goods as per audited financial statements. Then compare that amount of credit with credit claimed for FY 17-18 as per GSTR 9.

You have to give reason in both reconciliation cases and declare the amount of tax, interest, penalty etc. payable for un-reconciled credit (if un-reconciled amount appears) if applicable.

Table 12A: ITC availed as per audited Annual Financial Statement for the State/ UT (For multi-GSTIN units under same PAN this should be derived from books of accounts):

As per the process of segregation of data (already described the process in description of table 5A) of financial statements for multi GSTIN unit holder, you have to segregate the Input Tax Credit of financial statements for that GSTIN and put the amount of ITC of financials in table 12A. Please watch my previous write up regarding GST audit u/s 35(5) for details procedure of making various segregated data sheet for malty GSTIN cases.

Very Important matter regarding that table:

Sometime auditee maintains two separate ledgers for credit matters [Input Tax= transfer tax amount in that ledger in time of inward supply accounted in financial books & Input Tax Credit= Transfer amount from Input Tax ledger after fulfilling the conditions of law, just like section 16(2) by claiming it through GSTR 3B or in some cases, through ITC forms], and that separate maintenance is better for re conciliation cases also. You have to calculate the total debit side figure for the financial year 2017-18 of Input Tax ledger. Then from the amount you have to deduct block credit/ineligible credit and reversal of credit figures for entire year (reversal of credit’s figure you have to take from Input Tax Credit Ledger’s credit side). And the result amount you have to put in table 12A. Auditors should give the discloser regarding that point as per auditee’s accounting policies and GST credit maintenance regarding matters.

Table 12B: (Add) ITC booked in earlier Financial Years claimed in current Financial Year: GST came in force in FY 17-18 so that table is not effected by data for reconciliation for FY 17-18 most of the cases. You have to declare here the transitional credit as the transitional credit directly put into input tax credit ledger in place of input tax ledger (formed in applicable cases for any previous indirect tax law and claimed in GST era) which was taken in financials books of FY 16-17. As the current financial years input tax ledger has no effect of that credit, you have to add to reach GST purpose credit.

Table 12C: (Less) ITC booked in current Financial Year to be claimed in subsequent Financial Years:

You have to calculate the amounts of Input Tax for F.Y. 17-18 which were transferred to Input Tax Credit account within allowable March 2019’s GSTR 3B filing date/up to the (allowable) date of GSTR 9 filing as per new Gujarat High Court judgment (by taking support of GSTR 3B of FY-18-19) and declared the amount of credit in that table. The value of the table should match with the amount of table 13 of GSTR 9.

Table 12D (Auto calculated) ITC availed as per audited financial statements or books of account:

That table is auto calculated table. The amount is the calculated credit according to reconciliation. As per Accounting books, the figure shall matched with total debit side transactions of Input Tax Credit Ledger for the FY 17-18 after reducing the Reversal of credit (Reversal of credits are reflected in credit side of Input Tax Credit Ledger) for the year of 2017-18.

Table 12E: ITC claimed in Annual Return (GSTR9):

Now you have to put here the credit as per GSTR 9 for comparing the credit with above table’s amount. Net ITC available for utilization as declared in Table 7J of Annual Return (GSTR9) shall be declared here

Table 12F: Un-reconciled ITC:

If any difference stands, the amount is reflected here.

Table 13: Reasons for un-reconciled difference in ITC

You have to put the reasons for un-reconciled amount here. When 12D is greater than 12E, it may be a case where reversal or ineligible credit and credit laps purpose accounting entry is not passed in accounting books. And where 12E is greater than 12D, it may attract the cases of availing of unjustified credit or wrong credit. So it may attract additional tax and interest and others liability.

Table 14: Reconciliation of ITC declared in Annual Return (GSTR9) with ITC availed on expenses as per audited Annual Financial Statement or books of account:

This table is given mainly for putting the input tax and, amount of eligible ITC availed according to head wise segregation. Here expenses means including capital expenses. Some heads are given here and you can put any others expenses options for the heads which are not same as declared heads. From my point of view, Amount of table 12A should bifurcate head wise and put the head wise credit in column 3 of GSTR 9C (Amount of Total ITC) now from the amount you have to deduct the illegible credit, block credit, reversal of credit, credit claimed in FY 18-19 as per head wise segregations. Now in Table 14R, the summation of head wise data will be automatically calculated. The amount of table 14R shall reflect as same figure of table 12D most of the time and you have to put the Credit claimed data in annual return (Table 7J of GSTR 9) in table 14S and if any un-reconciled amount is founded, that should reflect in table 14T

Table 15: Reasons for un-reconciled difference in ITC

Now you have to put the reasons if there is any un-reconciled amount was found.

Table 16: Tax payable on un-reconciled difference in ITC (due to reasons specified in 13 and 15 above)

If un-reconciled amount appear in table 12F or table 14T and as per table 13 and 15’s reason it proves that the auditee claiming unjustified credit or wrong credit in GST returns, you have to declare the payable amount in that table.

Part V (Pt.v) Auditor’s recommendation on additional Liability due to non-reconciliation

Firstly from my point of view, auditors shall give his recommendations of additional liability after considering table 11 and table 16. He has to put the figures in Pt. V. after calculating the amount as per requirement.

Any other amount paid for supplies not included in Annual Return (GSTR 9): When any supply not declared in GSTR 9 and also that amount not create any payable liability in table 11 of GSTR 9C, auditor have to recommend the payable tax, interest and others through that table.

Outstanding demands to be settled: That part is little challenging for auditors. It is subject matter of demand and recovery chapter of CGST act. From my point of view SCN and statements should not be treated as demand. In primary stages Demand Orders which are treated as notice for recovery are considered as demand. Just like DRC 07 form. Now if the auditee filed appeal to higher authority as per law within prescribed time then that order should not be treated as demand at that point. Now if any demand notice’s demand was paid by auditee then that should not be declared here. When any SCN or statement was provide by authority for FY 17-18 and auditee declare the tax implementation through returns, then that also should not be declare here. A discloser can be made for that part declaring the details.

Erroneous refund to be paid back: one situation was already discussed in “Cases related to Table 9R, Table 10 and Table 11” discussion. Auditors have to watch all refunds from the point of view of section 54 of CGST act. If any received refund was not permissible according to the law, auditor can make that recommendation.

This write up is not for professional purpose. Every point of that write up depends on each practical case study.

(Author- MRIDUL (Mrinal Kanti Das), B.Com (Hons), Sr. Accounts and Taxation Manager, S.K. Sinha Ray & Co., Advocate and Tax Consultants, [email protected])